CDMA body wants GSM units to pay up

Joji Thomas Philip, TNNAug 6, 2007, 03.56am IST

NEW DELHI: The war of words over second generation (2G) spectrum allocation and pricing shows no sign of ending, rather, it has only escalated with CDMA operators now petitioning telecom minister A Raja, telecom regulator Trai and the Department of Telecom (DoT) demanding that all GSM operators be made to pay for additional spectrum allocated to them beyond 6.25 MHz, prescribed in the licence. (The technology that is currently used for all mobile services in the country is 2G.)

ET has also learnt that DoT has constituted an internal committee to take a relook at 2G-spectrum allocation procedure. Currently, 2G spectrum is given to operators for free, but linked to their meeting the prescribed subscriber norms. Sources said future 2G allocations to all operators may be suspended until the committee comes out with its report.

The issue is as follows: CDMA operators share the view that as per the unified access service licence (UASL), each GSM operator is entitled to only 6.25 MHz of 2G spectrum and each CDMA operator up to 5 MHz for free, while adding that further allocation of this resource must be priced.

GSM operators have strongly contested this and say that licences awarded by the government do not cap the spectrum allocation to 6.25 MHz for GSM, and also say that they already pay an additional price for additional spectrum: "Licence stipulates that any additional bandwidth that is allocated will attract additional licence fee which will be chargeable on a revenue-share basis. Thus, the principle for charging for additional spectrum on a revenue-share basis is clearly provided for under licence," says the Cellular Operators Association of India, the body representing all GSM operators.

Following the COAI's communication to Mr Raja last week, CDMA players through their industry body Association of Unified Service Providers of India (AUSPI) in a counter-reply has said: "It is no secret that the spectrum allocation to the GSM operators has been way beyond the amounts contracted by their licences. However, the Cellular Operators Association is trying to establish that their licence entitles them to get spectrum beyond the contracted amount, without paying any additional upfront charges."

When asked on the issue, AUSPI general secretary SC Khanna told ET: "The argument that since the government has prescribed spectrum charges up to 15 MHz it has agreed or is contractually obligated to give the spectrum up to 15 MHz, is a complete distortion of truth. If that was the meaning and intention of the government, DoT will have issued the necessary amendments in the licence agreement for allocation of spectrum up to 15 MHz".

He also added that since it may not be possible to take back spectrum from those who have been allocated it, the GSM operators who have been given spectrum beyond the licence mandated amounts must be asked to pay for the additional spectrum at the market rate, which can be easily computed based on the valuations of the cellular firms seen in the recent months.

COAI however has argued that GSM players have paid an initial usage charge of 2% for an allotment of 4.4 MHz spectrum and additional 1% charge on each additional tranche of spectrum that had been allotted. "Based on actual data collected from some large operators and then pro-rating it for the entire GSM industry, it is estimated that the GSM industry has already paid over Rs 1,800 crore on account of above such additional allotments of spectrum," the COAI said in its communication to Mr Raja last week.